Terms of the Notes
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Issuer:
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Barclays Bank PLC (“Barclays”)
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Original Offering
Price:
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$10.00 per unit
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Term:
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Approximately one year and one week
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Underlying Stock:
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Common stock of General Electric Company (the “Underlying Company”) (NYSE symbol:
“GE”)
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Starting Value:
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The Volume Weighted Average Price on the pricing date
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Volume Weighted Average
Price:
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The volume weighted average price (rounded to two decimal places) shown on page “AQR” on
Bloomberg L.P. for trading in shares of the Underlying Stock taking place from approximately 9:30 a.m. to 4:02 p.m. on all U.S. exchanges.
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Ending Value:
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The Observation Level on the final Observation Date.
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Observation
Level:
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The Closing Market Price of one share of the Underlying Stock on any Observation Date, multiplied by the
Price Multiplier.
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Observation
Dates:
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June , 2013, September , 2013, and January
, 2014 (the final Observation Date), approximately six, nine, and twelve months after the pricing date.
The Observation Dates are subject to postponement in the event of Market Disruption Events, as described on page S-20 of product supplement STOCK STR-1.
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Call Level:
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100% of the Starting Value
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Call Amounts (per Unit) and Call
Premiums:
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[$10.60 to $10.80], representing a Call Premium of [6% to 8%] of the Original Offering Price, if called on
the first Observation Date;
[$10.90 to $11.20], representing a Call Premium of [9%
to 12%] of the Original Offering Price, if called on the second Observation Date; and
[$11.20 to $11.60], representing a Call Premium of [12% to 16%] of the Original Offering Price, if called on the final Observation Date.
The actual Call Amounts and Call Premiums will be determined on the pricing date.
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Call Settlement
Dates:
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The fifth business day following the applicable Observation Date, subject to postponement as described on
page S-20 of product supplement STOCK STR-1; provided however, that the Call Settlement Date related to the final Observation Date will be the maturity date.
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Threshold Value:
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100% of the Starting Value
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Price Multiplier:
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1, subject to adjustment for certain corporate events relating to the Underlying Stock described beginning
on page S-24 of product supplement STOCK STR-1.
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Joint Calculation
Agents:
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Barclays and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”)
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Fees Charged:
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The public offering price of the notes includes the underwriting discount of $0.125 per unit as listed on the cover page and an additional charge of
$0.05 per unit more fully described on page TS-
7.
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Payments Determination
Automatic Call Provision:
Redemption Amount Determination:
If the notes are not called, you will receive the Redemption Amount per unit on the maturity date, determined as follows:
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$10 +
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[
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$10 ×
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(
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Ending Value – Threshold Value
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)
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]
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Starting Value
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Because the Threshold Value for the notes is equal to the Starting Value, you will lose all or a portion of your investment
if the Ending Value is less than the Starting Value
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Strategic Accelerated Redemption Securities
®
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TS-2
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Strategic Accelerated Redemption Securities
®
Linked to the Common Stock of General Electric Company, due January ,
2014
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Investor Considerations
You may wish to consider an investment in the notes if:
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You anticipate that the Observation Level of the Underlying Stock on any of the Observation Dates will be equal to or greater than the Starting Value, and, in
that case, you accept an early exit from your investment.
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§
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You accept that the investment return on the notes, if any, will be limited to the return represented by the applicable Call Premium even if the percentage
change in the price of the Underlying Stock is significantly greater than the applicable Call Premium.
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§
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If the notes are not called, you accept that your investment will result in a loss, which could be significant, if the Ending Value is below the Threshold Value.
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§
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You are willing to forgo the interest payments that are paid on traditional interest bearing debt securities.
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§
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You are willing to forgo dividends or other benefits of owning shares of the Underlying Stock.
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§
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You are willing to accept a limited market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various
factors, including our actual and perceived creditworthiness, and the fees charged on the notes, as described on page TS-2.
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§
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You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Call Amounts and the Redemption Amount.
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The notes may not be an appropriate investment for you if:
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You wish to make an investment that cannot be automatically called prior to maturity.
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§
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You believe that the price of the Underlying Stock will decrease from the Starting Value to the Ending Value.
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§
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You anticipate that the Observation Level will be less than the Call Level on each Observation Date.
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§
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You seek an uncapped return on your investment.
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§
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You seek 100% principal protection or preservation of capital.
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§
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You seek interest payments or other current income on your investment.
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§
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You want to receive dividends or other distributions paid on the Underlying Stock.
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§
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You seek an investment for which there will be a liquid secondary market.
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§
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You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
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We urge you to consult your investment, legal,
tax, accounting, and other advisors before you invest in the notes.
Hypothetical Payments
The following examples are for purposes of illustration only. They are based on
hypothetical
values and show
hypothetical
returns on the notes.
The
actual amount you receive and the resulting return will depend on the actual Starting Value, Threshold Value, Call Level, Observation Levels, Call Premiums, and the term of your investment.
The following examples do not take into account any tax
consequences from investing in the notes. These examples are based on:
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1)
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a Starting Value of 100.00;
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2)
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a Threshold Value of 100.00;
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3)
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a Call Level of 100.00;
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4)
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an expected term of the notes of approximately one year and one week;
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5)
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a Call Premium of 7.00% of the Original Offering Price if the notes are called on the first Observation Date, 10.50% if called on the second Observation Date, and 14.00% if
called on the final Observation Date (the midpoint of the applicable Call Premium ranges); and
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6)
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Observation Dates occurring approximately six, nine, and twelve months after the pricing date.
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The
hypothetical
Starting Value of 100.00 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value of the Underlying Stock. For recent
actual prices of the Underlying Stock, see “The Underlying Stock” section below. In addition, all payments on the notes are subject to issuer credit risk.
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Strategic Accelerated Redemption Securities
®
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TS-3
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Strategic Accelerated Redemption Securities
®
Linked to the Common Stock of General Electric Company, due January ,
2014
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Notes Are Called on an Observation Date
The notes will be called at $10.00 plus the applicable Call Premium on one of the Observation Dates if the Observation Level is equal to or greater than the Call Level.
Example 1
– The Observation Level on the first Observation Date is 110.00. Therefore, the notes will be called at $10.00 plus the Call Premium of $0.70
= $10.70 per unit. After the notes are called, they will no longer remain outstanding and there will not be any further payments on the notes.
Example 2
– The Observation Level on the first Observation Date is below the Call Level, but the Observation Level on the second Observation Date is
105.00. Therefore, the notes will be called at $10.00 plus the Call Premium of $1.05 = $11.05 per unit. After the notes are called, they will no longer remain outstanding and there will not be any further payments on the notes.
Example 3
– The Observation Levels on the first and second Observation Dates are below the Call Level, but the Observation Level on the third and final
Observation Date is 105.00. Therefore, the notes will be called at $10.00 plus the Call Premium of $1.40 = $11.40 per unit.
Notes Are Not Called
on Any Observation Date
Example 4
– The notes are not called on any Observation Date and the Ending Value is less than the Threshold
Value. The Redemption Amount will be less, and possibly significantly less, than the Original Offering Price. For example, if the Ending Value is 80.00, the Redemption Amount per unit will be:
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$10 +
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[
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$10 ×
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(
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80.00 – 100.00
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)
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]
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= $8.00
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100.00
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Summary of the Hypothetical Examples
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Notes Are Called on an Observation Date
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Notes Are Not
Called on Any
Observation Date
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Example 1
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Example 2
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Example 3
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Example 4
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Starting Value
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100.00
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100.00
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100.00
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100.00
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Call Level
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100.00
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100.00
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100.00
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100.00
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Threshold Value
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100.00
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100.00
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100.00
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100.00
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Observation Level on the First Observation Date
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110.00
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90.00
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90.00
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88.00
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Observation Level on the Second Observation Date
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N/A
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105.00
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83.00
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78.00
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Observation Level on the Final Observation Date
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N/A
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N/A
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105.00
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80.00
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Total Return of the Underlying Stock
(1)
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11.65%
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7.46%
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8.46%
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-16.54%
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Return of the Notes
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7.00%
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10.50%
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14.00%
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-20.00%
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Call Amount /
Redemption Amount per Unit
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$10.70
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$11.05
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$11.40
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$8.00
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(1)
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The total return of the Underlying Stock assumes:
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(a)
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the percentage change in the price of the Underlying Stock from the Starting Value to the Observation Level or Ending Value, as applicable;
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(b)
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a constant dividend yield of 3.29% per annum; and
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(c)
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no transaction fees or expenses.
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Strategic Accelerated Redemption Securities
®
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TS-4
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Strategic Accelerated Redemption Securities
®
Linked to the Common Stock of General Electric Company, due January ,
2014
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Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. You should carefully review the more
detailed explanation of risks relating to the notes in the “Risk Factors” sections beginning on page S-9 of product supplement STOCK STR-1 and page S-6 of the Series A MTN prospectus supplement identified above under “Summary.”
We also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
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§
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If the notes are not called, your investment will result in a loss; there is no guaranteed return of principal.
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§
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Your yield may be less than the yield you could earn by owning a conventional debt security of comparable maturity.
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§
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Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If
we become insolvent or are unable to pay our obligations, you may lose your entire investment.
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§
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Your investment return, if any, is limited to the return represented by the applicable Call Premium and may be less than a comparable investment directly in the
Underlying Stock.
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§
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If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for the notes due to, among other things, the
inclusion of fees charged for developing, hedging and distributing the notes, as described on page TS-7 and various credit, market and economic factors that interrelate in complex and unpredictable ways.
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§
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A trading market is not expected to develop for the notes. We, MLPF&S and our respective affiliates are not obligated to make a market for, or to repurchase,
the notes.
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§
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Our business, hedging and trading activities, and those of MLPF&S and our respective affiliates (including trading in shares of the Underlying Stock), and
any hedging and trading activities we, MLPF&S or our respective affiliates engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you.
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§
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The Underlying Company will have no obligations relating to the notes, and neither we nor MLPF&S will perform any due diligence procedures with respect to
the Underlying Company in connection with this offering.
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§
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You will have no rights of a holder of the Underlying Stock, and you will not be entitled to receive shares of the Underlying Stock or dividends or other
distributions of the Underlying Company.
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§
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While we, MLPF&S or our respective affiliates may from time to time own securities of the Underlying Company, we, MLPF&S and our respective affiliates do
not control the Underlying Company, and are not responsible for any disclosure made by the Underlying Company.
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§
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The payments on the notes will not be adjusted for all corporate events that could affect the Underlying Stock. See “Description of the
Notes—Anti-Dilution Adjustments” beginning on page S-24 of product supplement STOCK STR-1
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§
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There may be potential conflicts of interest involving the calculation agent. We have the right to appoint and remove the calculation agent.
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§
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See “Material U.S. Federal Income Tax
Consequences” below and “U.S. Federal Income Tax Summary” beginning on page S-34 of product supplement STOCK STR-1.
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Strategic Accelerated Redemption Securities
®
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TS-5
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Strategic Accelerated Redemption Securities
®
Linked to the Common Stock of General Electric Company, due January ,
2014
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The Underlying Stock
We have derived the following information from publicly available documents published by the Underlying Company. We have not independently verified the accuracy or completeness of the following information. General
Electric Company is a globally diversified technology and financial services company. The company’s products and services include aircraft engines, power generation, water processing, and household appliances to medical imaging, business and
consumer financing and industrial products.
Because the Underlying Stock is registered under the Securities Exchange Act of 1934, the Underlying
Company is required to file periodically certain financial and other information specified by the SEC. Information provided to or filed with the SEC by the Underlying Company can be located at the Public Reference Section of the SEC, 100 F Street,
N.E., Room 1580, Washington, D.C. 20549 or through the SEC’s web site at http://www.sec.gov by reference to SEC CIK number 40545.
This term sheet
relates only to the notes and does not relate to the Underlying Stock or to any other securities of the Underlying Company. None of us, MLPF&S, or any of our respective affiliates has participated or will participate in the preparation of the
Underlying Company’s publicly available documents. None of us, MLPF&S, or any of our respective affiliates has made any due diligence inquiry with respect to the Underlying Company in connection with the offering of the notes. None of us,
MLPF&S, or any of our respective affiliates makes any representation that the publicly available documents or any other publicly available information regarding the Underlying Company are accurate or complete. Furthermore, there can be no
assurance that all events occurring prior to the date of this term sheet, including events that would affect the accuracy or completeness of these publicly available documents that would affect the trading price of the Underlying Stock, have been or
will be publicly disclosed. Subsequent disclosure of any events or the disclosure of or failure to disclose material future events concerning the Underlying Company could affect the value of the Underlying Stock and therefore could affect your
return on the notes. Information from outside sources is not incorporated by reference in, and should not be considered part of, this term sheet or any accompanying prospectus, prospectus supplement or product supplement. The selection of the
Underlying Stock is not a recommendation to buy or sell the Underlying Stock.
The Underlying Stock trades on the New York Stock Exchange under the
symbol “GE.”
Historical Data
The
following table shows the quarterly high and low Closing Market Prices of the shares of the Underlying Stock on its primary exchange from the first quarter of 2007 through November 20, 2012. We obtained this historical data from Bloomberg L.P.
We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P.
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High ($)
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Low ($)
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2007
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First Quarter
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38.11
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34.09
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Second Quarter
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39.29
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34.76
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Third Quarter
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41.77
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36.90
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Fourth Quarter
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42.12
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36.25
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2008
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First Quarter
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37.49
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31.70
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Second Quarter
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38.43
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26.26
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Third Quarter
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29.95
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23.10
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Fourth Quarter
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24.50
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12.84
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2009
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First Quarter
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17.07
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6.66
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Second Quarter
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14.53
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10.17
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Third Quarter
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17.01
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10.71
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Fourth Quarter
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16.84
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14.19
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2010
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First Quarter
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18.45
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15.45
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Second Quarter
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19.50
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14.42
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Third Quarter
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16.66
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13.88
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Fourth Quarter
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18.32
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15.76
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2011
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First Quarter
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21.52
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18.28
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Second Quarter
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20.65
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17.97
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Third Quarter
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19.30
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15.01
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Fourth Quarter
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18.23
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14.69
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2012
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First Quarter
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20.21
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18.36
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Second Quarter
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20.84
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18.15
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Third Quarter
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22.73
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19.44
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Fourth Quarter (through November 20, 2012)
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23.12
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20.01
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This historical data on the Underlying Stock is not necessarily indicative of the future performance of the Underlying Stock or
what the value of the notes may be. Any historical upward or downward trend in the price per share of the Underlying Stock during any period set forth above is not an indication that the price per share of the Underlying Stock is more or less likely
to increase or decrease at any time over the term of the notes.
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Strategic Accelerated Redemption Securities
®
|
|
TS-6
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Strategic Accelerated Redemption Securities
®
Linked to the Common Stock of General Electric Company, due January ,
2014
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Before investing in the notes, you should consult publicly available sources for the prices and trading pattern of
the Underlying Stock.
Supplement to the Plan of Distribution
We may deliver the notes against payment therefor in New York, New York on a date that is greater than three business days following the pricing date. Under Rule 15c6-1 of the Securities Exchange Act of 1934,
trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, if the initial settlement of the notes occurs more than three business days from the
pricing date, purchasers who wish to trade the notes more than three business days prior to the original issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities exchange. In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units.
MLPF&S will not receive an underwriting discount for notes sold to certain fee-based trusts and fee-based discretionary accounts managed by U.S.
Trust operating through Bank of America, N.A.
If you place an order to purchase the notes, you are consenting to MLPF&S acting as a principal in
effecting the transaction for your account.
MLPF&S may repurchase and resell the notes, with repurchases and resales being made at prices related
to then-prevailing market prices or at negotiated prices. MLPF&S may act as principal or agent in these market-making transactions; however it is not obligated to engage in any such transactions.
The distribution of the Note Prospectus in connection with these offers or sales will be solely for the purpose of providing investors with the description of the
terms of the notes that was made available to investors in connection with their initial offering. Secondary market investors should not, and will not be authorized to, rely on the Note Prospectus for information regarding Barclays or for any
purpose other than that described in the immediately preceding sentence.
Role of MLPF&S
Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us as principal at the public offering price indicated on the cover of
this term sheet, less the indicated underwriting discount. The public offering price includes, in addition to the underwriting discount, a charge of approximately $0.05 per unit, reflecting an estimated profit earned by MLPF&S from transactions
through which the notes are structured and resulting obligations hedged. Actual profits or losses from these hedging transactions may be more or less than this amount. In entering into the hedging arrangements for the notes, we seek competitive
terms and may enter into hedging transactions with MLPF&S or one of its subsidiaries or affiliates.
All charges related to the notes, including the
underwriting discount and the hedging related costs and charges, reduce the economic terms of the notes. For further information regarding these charges, our trading and hedging activities and conflicts of interest, see “Risk
Factors—General Risks Relating to the Notes” beginning on page S-9 and “Use of Proceeds” on page S-18 of product supplement STOCK STR-1.
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Strategic Accelerated Redemption Securities
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TS-7
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Strategic Accelerated Redemption Securities
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Linked to the Common Stock of General Electric Company, due January ,
2014
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Material U.S. Federal Income Tax Consequences
The material tax consequences of your investment in the notes are summarized below. The discussion below supplements the discussions under “U.S. Federal Income
Tax Summary” beginning on page S-34 of product supplement STOCK STR-1, and “Certain U.S. Federal Income Tax Considerations”, beginning on page S-132 of the Series A MTN prospectus supplement. Except as noted under “Non-U.S.
Holders” below, this section applies to you only if you are a U.S. holder (as defined in product supplement STOCK STR-1) and you hold your notes as capital assets for tax purposes and does not apply to you if you are a member of a class of
holders subject to special rules or are otherwise excluded from the discussion in product supplement STOCK STR-1 (for example, if you did not purchase your notes in the initial issuance of the notes).
The U.S. federal income tax consequences of your investment in the notes are uncertain and the Internal Revenue Service could assert that the notes should be taxed
in a manner that is different than described below. Pursuant to the terms of the notes, you agree with us, in the absence of a change in law or an administrative or judicial ruling to the contrary, to characterize your notes as a pre-paid
cash-settled executory contract with respect to the Underlying Stock. If your notes are so treated, you should generally recognize capital gain or loss upon the sale, redemption or maturity of your notes in an amount equal to the difference between
the amount you receive at such time and the amount you paid for your notes. Such gain or loss should generally be long-term capital gain or loss if you have held your notes for more than one year, and otherwise should generally be short-term capital
gain or loss. Short-term capital gains are generally subject to tax at the marginal tax rates applicable to ordinary income.
In the opinion of our
special tax counsel, Sullivan & Cromwell LLP, the notes should be treated in the manner described above. This opinion assumes that the description of the terms of the notes in this term sheet is materially correct.
As discussed further in product supplement STOCK STR-1, the Treasury Department and the Internal Revenue Service are actively considering various alternative
treatments that may apply to instruments such as the notes, possibly with retroactive effect. Other alternative treatments for your notes may also be possible under current law. For example, it is possible that your notes could be treated as an
investment unit consisting of (i) a debt instrument that is issued to you by us and (ii) a put option in respect of the Underlying Stock that is issued by you to us. You should consult your tax advisor as to the possible consequences of
this alternative treatment.
For a further discussion of the tax treatment of your notes as well as other possible alternative characterizations, please
see the discussions under “U.S. Federal Income Tax Summary” in product supplement STOCK STR-1, and “Certain U.S. Federal Income Tax Considerations — Certain Notes Treated as Forward Contracts or Executory Contracts” in the
Series A MTN prospectus supplement. For additional, important considerations related to tax risks associated with investing in the notes, you should also examine the discussion in “Risk Factors — General Risks Relating to the Notes —
Significant aspects of the U.S. federal income tax treatment of the notes are uncertain” beginning on page S-15 of product supplement STOCK STR-1. You should consult your tax advisor as to the possible alternative treatments in respect of the
notes.
“Specified Foreign Financial Asset” Reporting. Under legislation enacted in 2010, owners of “specified foreign financial
assets” with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) may be required to file an information report with respect to such assets with their tax returns. “Specified foreign financial
assets” generally include any financial accounts maintained by foreign financial institutions as well as any of the following (which may include your notes), but only if they are not held in accounts maintained by financial institutions:
(i) stocks and securities issued by non-U.S. persons, (ii) financial instruments and contracts held for investment that have non-U.S. issuers or counterparties and (iii) interests in foreign entities. Holders are urged to consult
their tax advisors regarding the application of this legislation to their ownership of the notes.
Non-U.S. Holders. The Treasury Department has issued
proposed regulations under Section 871(m) of the Internal Revenue Code which could ultimately require us to treat all or a portion of any payment in respect of your Notes as a “dividend equivalent” payment that is subject to
withholding tax at a rate of 30% (or a lower rate under an applicable treaty). However, such withholding would potentially apply only to payments made after December 31, 2013. You could also be required to make certain certifications in order
to avoid or minimize such withholding obligations, and you could be subject to withholding (subject to your potential right to claim a refund from the Internal Revenue Service) if such certifications were not received or were not satisfactory. You
should consult your tax advisor concerning the potential application of these regulations to payments you receive with respect to the Notes when these regulations are finalized.
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Strategic Accelerated Redemption Securities
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TS-8
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Strategic Accelerated Redemption Securities
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Linked to the Common Stock of General Electric Company, due January ,
2014
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Where You Can Find More Information
We have filed a registration statement (including a product supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which this term sheet relates. Before you invest, you should read
the Note Prospectus, including this term sheet, and the other documents that we have filed with the SEC, for more complete information about us and this offering. You may get these documents without cost by visiting EDGAR on the SEC website at
www.sec.gov. Alternatively, we, any agent, or any dealer participating in this offering will arrange to send you these documents if you so request by calling MLPF&S toll-free at 1-866-500-5408.
Market-Linked Investments Classification
MLPF&S classifies certain market-linked investments (the “Market-Linked Investments”) into categories, each with
different investment characteristics. The following description is meant solely for informational purposes and is not intended to represent any particular Enhanced Return Market-Linked Investment or guarantee any performance.
Enhanced Return Market-Linked Investments are short- to medium-term investments that offer you a way to enhance exposure to a particular market view without taking
on a similarly enhanced level of market downside risk. They can be especially effective in a flat to moderately positive market (or, in the case of bearish investments, a flat to moderately negative market). In exchange for the potential to receive
better-than market returns on the linked asset, you must generally accept market downside risk and capped upside potential. As these investments are not market downside protected, and do not assure full repayment of principal at maturity, you need
to be prepared for the possibility that you may lose all or part of your investment.
“Strategic Accelerated Redemption
Securities
®
” is registered service mark of Bank of America Corporation, the parent company of MLPF&S.
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Strategic Accelerated Redemption Securities
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TS-9
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Yucheng Technologies Limited - Ordinary Shares (MM) (NASDAQ:YTEC)
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